A Question on the Price of a Turkey

by Charles DukeOctober 19, 2018

We too often do not consider the plight of the farmer when we complain about the prices at large grocery store chains versus the higher prices at retailers who distribute the products of smaller artisan farmers. I came across a blog about Turkey prices by a farmer in Wisconsin which was several years old. The farmer had gone to a large grocery store nearby his farm and found the following price label:

Current prices on a frozen turkey, that could be a year old, are less than $1.38 today - in some places less than a $1.00. That got our farmer doing some math. He ran some numbers on a flock of 50 turkeys (this is 4 years ago). He determined that, before any labor or indirect expenses ( and important direct expenses like shipping and flock shrinkage), a conventional turkey cost $2.71 per pound and a heritage turkey cost $4.03 per pound. He calculated some, not all, of the labor (at minimum wage - !) and indirect costs and concluded he would maybe make $5.20 per turkey on average. If he sold at $1.38 to compete with the local store, he would lose $36 per bird.

He summed up his post saying: "This post is about arming you with the basic knowledge about the production of food so that you too can look at a price like $1.38/lb and wonder how it is possible. Some of the answers are wrapped up in the economies of scale and that’s why a lot of farms get big, but there are other answers that should alarm us.".

If we did ask the questions, what might some of the answers be? The economies of scale of a large turkey farm would certainly be part of the answer. But those operations leave to us, the consumers, the social and environmental costs including the red tide and other catastrophes from the effluent of these operations and their suppliers. And who ends up paying for the health issues associated with the kind of antibiotic exposure necessary to keep birds in the industrial environment alive?

Other answers would likely include the large grocery stores desire to attract more customers by making the price of a turkey a loss leader. Because it is a Thanksgiving requirement, consumers will be attracted to the low price, come into the store, and shop for everything else while they are there. The loss on the turkeys is a conscious promotional cost that negatively affects only the artisan farmer and his retail distributor whose product's price now compares poorly to the competition.

In a new world in which 66 percent of global consumers are willing to pay more for sustainable goods (and 73% of Millennials), why does the "loss leader for an unsustainable industrial turkey" ploy work? Why are consumers attracted to genetically engineered broad-breasted turkeys that are harmful in so many ways over the smaller farmers' sustainable and natural heritage breed animals for price alone?

To-Table would love to hear your thoughts on this conundrum. Please add them below.